• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Appraisal in an enviormentally contaminated town.

Status
Not open for further replies.

Lee SW IL

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Very small town, that had smelting site that produced waste cinders and slag that contained elevated levels of heavy metals, especially lead. I have documention from the EPA explaining the contamination, which I will include in the report, (as I will not interprete the report)

The entire town has already been surveyed and removal has begun. All city property, parks are already completed. I took pictures of the guys doing the cleanup. Areas througout the town require removal of 6" to 2' of contaminated soil. The site of the subject property requires no soil removal , lot next to the subject (which borrower also owns) needs removal. Have documention from the EPA.

Property is not to be sold until owner receives a "clean" letter. Since this is just in the beginning comps are few. (Its a manufactured home on top of it) But, I do not have historical data for supply and demand, DOM, and property values.

I know I have lots of explainin, just seeing if anyone has done a similar report, where historical data is not available.
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
Why don't you have any data?

Libby, Montana (in lincoln county) is a superfund site (asbestos), has been for 2 years. The state and the feds have known of health problems of the locals since 1990 or so. I do assignments in the area on an ongoing basis. Data is available.

In the 80's, Kellogg, Id. was also a cleanup area. Also plenty of data.
 

Lee SW IL

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Well, in 1993 it was discovered that they had contamination. In 1998, work began on the extent of contamination. In 2001 the contractor hired to being removal, went out of biz.

Almost, No real estate transactions until the property was declared clean.

Remember this town has only 1000 people. I don't know anyone that would want to move to a town that is enviormentally contaminated.
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
Its nice to have a challenging assignment once in a while isn't it?

I mean really! One just couldn't do the "Carlsen Cookie" Cutter every day.

That is a tough one. What you likely have, today, is a slight reduction in value, and a very large reduction in marketability. That is what is happening in Libby. But it is measurable due to continued activity. After the "clean slip" is given to the sites, I suspect market value and marketability will return to what it was prior to the superfund designation.

Kellogg idaho was another story. Values went into the toilet and remained there for some time. Good activity on the way down though (by investors buying on -the -come).

I am not sure one can complete this assignment without at least one sale to reflect neighborhood. Another words, all sales in a completely different area, then apply an adjustment? Try supporting that adjustment

[/u]
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
One just couldn't do the "Carlsen Cookie" Cutter every day.

this one could... I mean IF only! :p

Bring 'em ON!

not even back in the good ole days before Fannie and Freddie skimmed the cream :(
 

Stephen J. Vertin MAI

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Illinois
I love stuff like that. Given the limited information you have provided, I would also say there would be an extended marketing time. How, long do you think it will take to clean the site? If you do not have an exact figure I would give a reasonable estimate. Further, I would recommend it be conservative. Assuming it would be over a year, I would estimate the value of the house given the data available. If this value is based on comparable sold before pre-discovery of heavy metal, so be it. That is Ok. I would discount this indicated value using a reasonable rate of return. In otherwords, I would bring it back to present value to account for the time value of money because of its extended marketing time. Here are the steps again:

1) Value the property "as is" given current data
2) Estimate a clean up time (assuming it will be over a year)
3) Estimate a yeild rate of return
4) Estimate the present value based on discount.

This of course is shooting from the hip with, again, the limited data provided. Further, I would charge the client at least twice the going fee. Explain the steps needed.

Steve Vertin
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Contact an appraiser in Conroe, Texas. There was a subdivision there that was contaminated by cresote waste and 2-6 inches was removed on many of the homes. Loss in value prior to cleanup was approximately 90% ($10,000 for $100,000 home). Cleanup has been done, waste material covered and sealed on a few lots at the end of the subdivision. Should be able to get good comparable data as to market reaction.

Roger
 

Lee SW IL

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Based on the few sales, thankfully, there is not a 90% reduction in value.

There appears to be a much smaller effect, like closer to 10% +/-

I have comps pretty well picked (almost all sales in the town).

But, how would you tactfully state the appeal to the market on a property that is located in an enviormentally contaminated area?

Thx,
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Lee, I doubt there is any way to be tactful about it. Just state the facts as you know them, as they appear to be, and make it all subject to an environmental expert.

You might want to contact Don Clark (of this forum), since he is both an appraiser and environmental expert.

Really tough one!!!
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
How about:

Based on the limited information available to the appraiser as of the effective date of this report
the appeal to the market on a property that is located in
the subject area which is 'generally' known to be an area with environmental contamination issues appears stable. The subject appears to be marketable and has an estimated value of $zzz,000. This value may be subject to change dependant on further environmental studies or discovery, however no other information adversely affecting value is known or was disclosed to the appraiser....

Yeah they are going to scream and I would put in something else about the DOM of other properties...
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks